Banks await outcome of Dubai World talks
“The entire scene now depends on the outcome of the restructuring negotiations between Dubai World and the banks,” said Dheeraj Lakhwani, banking analyst at Prime Emirates. “Only then will confidence return and banks can decide how to pursue their lending strategy in UAE.”
Moody’s estimated Dubai World owes UAE banks $15 billion (Dh55 billion) based on its receipt of “sufficient information from most rated banks.” Provisions will also have to be made for heavy losses likely to be taken against exposure to the troubled Saudi groups Saad and Algosaibi.
And yet another big question mark remains over the recovery, or possible continued slide of the real estate sector in Dubai, to which local banks are heavily exposed. Emirates NBD, the Gulf’s largest lender by assets, said earlier this month its real estate exposure accounted for 27 per cent of its loan book.
Soft growth
It all adds up to another year of soft loan growth, said Janany Vamadeva banking analyst at HC Sec-urities in Dubai, which ultimately means low econ-omic growth.
“It’s a cycle,” Vamadeva said. “Without one you cannot have the other.”